conceding defeat

[kev374]

so what is the consensus here? Or is there no consensus? Wait for the correction or invest now regardless?

How about a safer bond fund returning 3-5%, anything like that exist among Fidelity or Vanguard funds? Thinking maybe I will keep money in a bond fund until the correction and branch out into regular mutual funds. Is that a good plan?

Dow is not headed to 21K, I can’t believe it, how high will it go? There are so many articles in the media saying a correction is imminent and that makes me really nervous.

[givdrvr]

Global trade is currently contracting with services leading the way, goods will follow, lead by the EU desires to punish UK over Brexit and Trump tariffs. The economy is not the stock market but at certain point the two reflect each other IMHO.

[tnuomarap]

~0% fed benchmark interest rate for nearly 10 years = epic bubbles in stock, housing and autos.

Unprecedented in fed history.

[kev374]

Some say epic bubble on the precipice of a monster crash.

Others say the US is the best economy right now relative to the rest – EU, Canada, AU all are faltering so stocks can only go higher.

So, hold out and wait for the correction or just get into the market and hope for the best?

[plm]

Why do people think there is a bubble?

According to historic data,
http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html

It seems like the geometric average is 7 for the last 10 years vs 10 percent in the past. So doesn’t this mean the market is undervalued since its been growing less than historic levels?

[tnuomarap]

[quote=plm]Why do people think there is a bubble?

According to historic data,
http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html

It seems like the geometric average is 7 for the last 10 years vs 10 percent in the past. So doesn’t this mean the market is undervalued since its been growing less than historic levels?[/quote]

Yes, but consider that GDP growth has been subpar for nearly a decade, around 2%. And yet as mentioned the market (dow) has soared (relative to gdp) during the same time period.

[phaster]

[quote=plm]Why do people think there is a bubble?

According to historic data,
http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html

It seems like the geometric average is 7 for the last 10 years vs 10 percent in the past. So doesn’t this mean the market is undervalued since its been growing less than historic levels?[/quote]

FYI when playing the markets or “forecasting” too often people get fixated
on the past financial performance figures because they expect the same
going forward, this is known as the “Gambler’s Fallacy” or the “Fallacy of
the Maturity of Chances” and why the SEC mandates investor warnings
(note this idea also applies to real estate prices)

http://www.investopedia.com/terms/g/gamblersfallacy.asp

[tnuomarap]

IMO as long as the fed keeps benchmark rates low – and I suspect they will, the housing and stock market bubble will continue to grow grow grow.

All it takes is one utterance of the word ‘tax’ or ‘regulation’ by Mr. T or Ryan and the market soars.

It’s ridiculous.

It’s 2006 all over again. Or maybe 2005.

[temeculaguy]

Whatever you do, do not listen to this crowd about stocks. Rich can help you with wealth management but that is his paying job.

Case and point- I did something similar 8 years ago here

https://piggington.com/dow_to_4000#comment-110240

https://piggington.com/where_would_piggs_by_the_stock_market#comment-190310

I’ve posted a few times over the years updating how much money I lost by listening back then.

March 2009 to today here is what happened
HOG 10 to 58
GE 8 to 33
COST 45 to 175
F 2 to 12
MO 15 to 73
HOV .85 to 2.37

Funny thing is most of them made most of their gains within a year or two.

I didn’t even bother to see if any of them split or what the dividend totals were as that will just compound the pain.

I did take lots of real estate advice from this site and I benefited immensely, doubled my money and for that I am eternally grateful. But I plan on living in my house for as long as I can climb stairs so it really isn’t an investment, just long term rent control. It has given me financial freedom but I still regret taking stock advice from this same crowd.

Think of piggington as a cardiologist, incredibly helpful for heart problems. Just don’t ask your cardiologist about a problem with a tooth, go find a dentist for that.

[plm]

[quote=phaster][quote=plm]Why do people think there is a bubble?

According to historic data,
http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html

It seems like the geometric average is 7 for the last 10 years vs 10 percent in the past. So doesn’t this mean the market is undervalued since its been growing less than historic levels?[/quote]

FYI when playing the markets or “forecasting” too often people get fixated
on the past financial performance figures because they expect the same
going forward, this is known as the “Gambler’s Fallacy” or the “Fallacy of
the Maturity of Chances” and why the SEC mandates investor warnings
(note this idea also applies to real estate prices)

http://www.investopedia.com/terms/g/gamblersfallacy.asp%5B/quote%5D

I don’t think the Gambler’s Fallacy applies in this case. Historical average of 10 or current average of 7 percent return is what one should expect over the long term.

[plm]

[quote=tnuomarap][quote=plm]Why do people think there is a bubble?

According to historic data,
http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html

It seems like the geometric average is 7 for the last 10 years vs 10 percent in the past. So doesn’t this mean the market is undervalued since its been growing less than historic levels?[/quote]

Yes, but consider that GDP growth has been subpar for nearly a decade, around 2%. And yet as mentioned the market (dow) has soared (relative to gdp) during the same time period.[/quote]

That’s a valid point that the stock market should grow slower if gdp slows. I think historically the stock market grows at a rate higher than gdp though. Maybe PE ratio is the best way to determine if there is a stock bubble.

[Coronita]

I stopped trying to outsmart the market. I just go with the flow.

[plm]

Not trying to outsmart the market. I am way too much of a novice for that. Just got extremely fortunate in the market last year (dumb luck) and talks of bubbles scare me into whether I should diversify. Last year I decided to let it ride and that worked out beautifully. Hope the market keeps going up.

[Coronita]

The Trump rally continues. All three indexes up over 1%

Are we market timing now? 🙂

[kev374]

market is over 21k DOW for the first time… it just seems a bit surreal because how much higher can it go?

This in the news today:

http://seekingalpha.com/article/4050865-stock-market-correction-finally-coming-march-rate-hike

[Author]

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